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Should You Consider Mr. Cooper (COOP) After Q2 Earnings Beat?
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Mr. Cooper Group Inc.(COOP - Free Report) shares moved upward for two straight days after it reported strong second-quarter 2024 results on Jul 25, 2024, before the opening bell. Since then, the stock has significantly fallen back. Nevertheless, shares of COOP have jumped 30.8% in the year-to-date period, outperforming the industry’s 5.9% growth and the S&P 500 Index’s 9.2% gain.
Image Source: Zacks Investment Research
Solid growth in Servicing and Originations units were major tailwinds for the company in the second quarter. The servicing portfolio has reached the $1.2 trillion mark. Overall, investors seem to be impressed with its focus on technological advancements.
The company announced the acquisition of Flagstar’s mortgage operations, which includes MSRs and subservicing contracts totaling almost $356 billion in UPB. The transaction is valued at $1.4 billion and is expected to close in the fourth quarter of this year. The move is expected to scale COOP’s servicing and subservicing operations.
Now, let's delve into the second-quarter results to gauge the company's operational performance.
Q2 Key Highlights
It reported second-quarter 2024 adjusted earnings per share (EPS) of $2.52, which beat the Zacks Consensus Estimate by 8.2%. The bottom line surged 51.8% year over year.
Mr. Cooper's total revenues climbed 3.4% year over year to $583 million. The top line beat the consensus mark by 4.7%.
Total expenses of $300 million rose 7.9% year over year due to increased salaries, wages and benefits and G&A costs. Interest income of $189 million jumped 61.5% year over year. Interest expenses increased 53.3% year over year to $187 million in the quarter under review.
Net income of $204 million in the second quarter jumped from $142 million a year ago.
Segmental Performance
The Servicing segment reported a pretax operating income of $354 million, which rocketed 45.7% year over year in the second quarter due to portfolio growth and strong operating leverage. Total revenues of $456 million jumped from $368 million a year ago and beat the Zacks Consensus Estimate by 1.1%. The servicing portfolio increased 37% year over year, surpassing the $1.2 trillion mark.
The Originations segment’s pretax operating income of $38 million remained flat year over year. Total revenues of $107 million in the second quarter rose from $97 million a year ago and beat the Zacks Consensus Estimate by 19.1%. Recapture percentage was at 21.6%, down from 23.5% a year ago, but beat the consensus estimate of 10.4%. Funded volume of almost $3.8 billion fell 0.7% a year ago but beat the consensus mark by 12.9%.
Financial Position (as of Jun 30, 2024)
Mr. Cooper exited the second quarter with total assets of $15.8 billion, higher than $14.2 billion at 2023-end. Cash and cash equivalents amounted to $642 million, higher than $571 million at 2023-end.
Net unsecured senior notes were at $4.1 billion, up from $3.2 billion at 2023 end. Total liabilities of $11.2 billion at the second-quarter end were higher than $9.9 billion at 2023 end. Total shareholders’ equity rose from $4.3 billion at 2023-end to $4.6 billion.
It reported a net operating cash outflow of $136 million in the first half of 2024 against an operating cash flow of $149 million a year ago.
Capital Deployment Update
The company bought back 0.3 million shares for $24 million in the quarter under review. It has around $270 million remaining in its repurchase program thanks to the authorization of an additional repurchase plan in July.
The company’s strong operations, rising profits and shareholder value boosting efforts are contributing to its current Zacks Rank #1 (Strong Buy), suggesting a lucrative investment opportunity for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Key Picks
Investors interested in the broader Finance space may look at some other top-ranked players like Jackson Financial Inc. (JXN - Free Report) , WisdomTree, Inc. (WT - Free Report) and HIVE Digital Technologies Ltd. (HIVE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $17.33 per share, which indicates 35% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues suggests a 116.7% surge from a year ago.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 64.9% year-over-year growth. During the past month, WT has witnessed three upward estimate revisions against none in the opposite direction. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 34.6% year-over-year improvement. During the past month, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $127.2 million, an 11.1% increase from a year ago.
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Should You Consider Mr. Cooper (COOP) After Q2 Earnings Beat?
Mr. Cooper Group Inc.(COOP - Free Report) shares moved upward for two straight days after it reported strong second-quarter 2024 results on Jul 25, 2024, before the opening bell. Since then, the stock has significantly fallen back. Nevertheless, shares of COOP have jumped 30.8% in the year-to-date period, outperforming the industry’s 5.9% growth and the S&P 500 Index’s 9.2% gain.
Solid growth in Servicing and Originations units were major tailwinds for the company in the second quarter. The servicing portfolio has reached the $1.2 trillion mark. Overall, investors seem to be impressed with its focus on technological advancements.
The company announced the acquisition of Flagstar’s mortgage operations, which includes MSRs and subservicing contracts totaling almost $356 billion in UPB. The transaction is valued at $1.4 billion and is expected to close in the fourth quarter of this year. The move is expected to scale COOP’s servicing and subservicing operations.
Now, let's delve into the second-quarter results to gauge the company's operational performance.
Q2 Key Highlights
It reported second-quarter 2024 adjusted earnings per share (EPS) of $2.52, which beat the Zacks Consensus Estimate by 8.2%. The bottom line surged 51.8% year over year.
Mr. Cooper's total revenues climbed 3.4% year over year to $583 million. The top line beat the consensus mark by 4.7%.
Total expenses of $300 million rose 7.9% year over year due to increased salaries, wages and benefits and G&A costs. Interest income of $189 million jumped 61.5% year over year. Interest expenses increased 53.3% year over year to $187 million in the quarter under review.
Net income of $204 million in the second quarter jumped from $142 million a year ago.
Segmental Performance
The Servicing segment reported a pretax operating income of $354 million, which rocketed 45.7% year over year in the second quarter due to portfolio growth and strong operating leverage. Total revenues of $456 million jumped from $368 million a year ago and beat the Zacks Consensus Estimate by 1.1%. The servicing portfolio increased 37% year over year, surpassing the $1.2 trillion mark.
The Originations segment’s pretax operating income of $38 million remained flat year over year. Total revenues of $107 million in the second quarter rose from $97 million a year ago and beat the Zacks Consensus Estimate by 19.1%. Recapture percentage was at 21.6%, down from 23.5% a year ago, but beat the consensus estimate of 10.4%. Funded volume of almost $3.8 billion fell 0.7% a year ago but beat the consensus mark by 12.9%.
Financial Position (as of Jun 30, 2024)
Mr. Cooper exited the second quarter with total assets of $15.8 billion, higher than $14.2 billion at 2023-end. Cash and cash equivalents amounted to $642 million, higher than $571 million at 2023-end.
Net unsecured senior notes were at $4.1 billion, up from $3.2 billion at 2023 end. Total liabilities of $11.2 billion at the second-quarter end were higher than $9.9 billion at 2023 end. Total shareholders’ equity rose from $4.3 billion at 2023-end to $4.6 billion.
It reported a net operating cash outflow of $136 million in the first half of 2024 against an operating cash flow of $149 million a year ago.
Capital Deployment Update
The company bought back 0.3 million shares for $24 million in the quarter under review. It has around $270 million remaining in its repurchase program thanks to the authorization of an additional repurchase plan in July.
The company’s strong operations, rising profits and shareholder value boosting efforts are contributing to its current Zacks Rank #1 (Strong Buy), suggesting a lucrative investment opportunity for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Key Picks
Investors interested in the broader Finance space may look at some other top-ranked players like Jackson Financial Inc. (JXN - Free Report) , WisdomTree, Inc. (WT - Free Report) and HIVE Digital Technologies Ltd. (HIVE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $17.33 per share, which indicates 35% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues suggests a 116.7% surge from a year ago.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 64.9% year-over-year growth. During the past month, WT has witnessed three upward estimate revisions against none in the opposite direction. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 34.6% year-over-year improvement. During the past month, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $127.2 million, an 11.1% increase from a year ago.